Either or both of you might want to register and pose your questions at the PMQ Think Tank at http://thinktank.pmq.com/viewforum.php?f=6. That is a forum where professional pizza operators go to with questions that relate to the business aspects of establishing and operating a pizza establishment.

By no means should you make your decision based on what you read here, but...

The biggest difference is that with an LLC your business liabilities are separate from your personal liabilities. In other words, if you were to default on a debt as a sole proprietor, the debtor can go after your personal assets in addition to your business assets, including your house. With an LLC your personal assets are protected. It is also easier to raise capital with an LLC.

One downside of an LLC is that it is more expensive and more complicated to start up and maintain.

It's not your liabilities you need to worry about per-se, but rather your contingent liabilities. You are not going to form an LLC and run out and get a bank, vendor, etc. to loan you money without a personal guarantee. You very well might have a customer who thinks you made them sick and decides to sue you. Now you will be very happy that you have the corporate veil of an LLC between your company and everything else you own.

As noted above, you do have minimum corporate governance requirements - board meetings, minute books, no intermingling assets, not sufficiently capitalized, etc - that you must maintain, or the courts may say your corporation has not been treated as a separate legal person and let the plaintiff go after your personal assets anyway.

The main downside of a corporation is double taxation, but you can manage this to a large extent.

CL

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"We make great pizza, with sourdough when we can, commercial yeast when we must, but always great pizza." Craig's Neapolitan Garage

Generally, a LLC (Limited Liablility Company) is a good way to go and preferred over sole proprietorship for liability reasons. It is a different entity than a corporation.

The pros/cons of each should be discussed with a professional. You can get an idea of what others are doing on a forum but it shouldn't be used as a basis for what you do for your personal situation. Keep in mind that the internet is filled with lots of great information but that there is lots of incorrect/incomplete information also.

Generally, a LLC (Limited Liablility Company) is a good way to go and preferred over sole proprietorship for liability reasons. It is a different entity than a corporation.

The pros/cons of each should be discussed with a professional. You can get an idea of what others are doing on a forum but it shouldn't be used as a basis for what you do for your personal situation. Keep in mind that the internet is filled with lots of great information but that there is lots of incorrect/incomplete information also.

You are absolutely correct. I was writing LLC and thinking Corporation. An LLC is certainly a simpler animal than a C-corp, and you do get passthrough income treatment. The one big no-no when running a LLC is comingling company funds with your own. So long as you don't do that, your liability limitations are probably pretty safe.

In any case, deb is exactly right that when starting a business, the last thing you want to do is take advice from pizzamaking.com members or the internet. Find a competent professional for help.

CL

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"We make great pizza, with sourdough when we can, commercial yeast when we must, but always great pizza." Craig's Neapolitan Garage

Just FYI, most states have government agencies that offer free help in starting a small business. Here in Ohio, the state has a website called the 1st Stop Business Connection that helped me a lot when I started my business. I learned a ton there and I was able to start an LLC with almost no legal assistance (YMMV). I'm sure that other states have similar things.